NGA applauds proposed updates to FTC, DOJ merger enforcement guidelines
The trade group said the changes would “significantly” alter the review standards as it pertains to reviewing mergers where a union of competing buyers lessens competition for other sellers.
The Federal Trade Commission headquarters is pictured in Washington, D.C. The agency's proposed noncompete ban may face legal challenges on several grounds.
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The trade group, which represents independent grocers, said the changes would “significantly” alter the merger standards as it pertains to reviewing mergers “that enhance buyer power,” noting that one of the 13 proposed updates directly addresses buyer power where a merger of competing buyers lessens competition for other sellers, per an emailed press release.
“NGA is pleased to see federal antitrust enforcers take seriously the competitive concerns that arise when dominant firms abuse their buyer power to impose discriminatory terms on their rivals,” NGA Senior Vice President of Government Relations and Counsel Chris Jones said in a statement.
The agencies’ review of their merger guidelines followed a recent executive order from President Joe Biden.
The proposed guideline updates will undergo a 60-day public comment period that will last until Sept. 18. NGA said it is still reviewing “the full impact” on independents by the suggested changes and will provide comments.
How the FTC and DOJ want to update their merger guidelines
Either the FTC or DOJ will handle the review process to determine if there are any antitrust concerns for mergers over a certain size (typically ones valued over $101 million). In a press release on Wednesday, the FTC and DOJ summarized the 13 proposed changes to how they review proposed mergers. Per the agencies, they are:
1. Mergers should not significantly increase concentration in highly concentrated markets.
2. Mergers should not eliminate substantial competition between firms.
3. Mergers should not increase the risk of coordination.
4. Mergers should not eliminate a potential entrant in a concentrated market.
5. Mergers should not substantially lessen competition by creating a firm that controls products or services that its rivals may use to compete.
6. Vertical mergers should not create market structures that foreclose competition.
7. Mergers should not entrench or extend a dominant position.
8. Mergers should not further a trend toward concentration.
9. When a merger is part of a series of multiple acquisitions, the agencies may examine the whole series.
10. When a merger involves a multi-sided platform, the agencies examine competition between platforms, on a platform, or to displace a platform.
11. When a merger involves competing buyers, the agencies examine whether it may substantially lessen competition for workers or other sellers.
12. When an acquisition involves partial ownership or minority interests, the agencies examine its impact on competition.
13. Mergers should not otherwise substantially lessen competition or tend to create a monopoly.
The agencies noted that they have amended the guidelines several times since they were first released in 1968.
For years, the NGA has been urging Congress and federal agencies to crack down on “power buyers” — businesses the trade group has said use their scale to wring “discriminatory prices and more favorable supply terms, special package offerings and product availability” from suppliers. The trade group is in support of enhancing enforcement of the Robinson-Patman Act, an antitrust law prohibiting price discrimination, that NGA says has been difficult to enforce because of the federal judiciary weakening the law.
In March, the trade group released a television spot designed to draw public attention to what the trade group says are “unfair and discriminatory tactics” by large food retailers that hurt independent grocers.
In November, the NGA said it was “encouraged” by the FTC’s reversal back to rigorous enforcement of a federal law that bans unfair methods of competition. The agency said at that time that its policy change comes after inconsistency in recent years with how it identifies and polices anti-competitive practices.
“NGA and its members have consistently warned federal antitrust officials about how US consumers are worse off due to buyer power abuses in an increasingly consolidated grocery sector,” Jones said. “This problem has been laid bare by pandemic-era supply chain disruptions and increasing food price inflation where independent grocers have been put at critical disadvantage relative to their dominant competitors, especially those who serve rural and urban communities.”
